401(k) balances rose sharply in 2006: Study

Aided by strong investment gains, employees' 401(k) account balances rose by nearly 19% on average in 2006, according to a new study.

Last year, the average account balance for 401(k) plan participants who have maintained accounts since 1999 was $121,202, up from $102,014 at year-end 2005, an 18.8% increase, according to the study by the Employee Benefit Research Institute and the Investment Company Institute.

"The average 401(k) plan participant had a good year in 2006 because the majority of 401(k) assets are invested in equities, and the stock market did very well last year," Jack VanDerhi, an EBRI fellow and a faculty member of Temple University's School of Business and Management in Philadelphia, said in a statement.

Measured over a longer period, account balances also rose significantly. Balances for participants with accounts between 1999 and 2006 increased an average of 8.7% a year.

Additionally, the study found that 18% of 401(k) plan participants had an outstanding loan last year. On average, participants' loans amounted to 12% of their account balances.

The EBRI-ICI analysis is based on a database of 53,931 plans with more than $1.2 trillion in assets.

The analysis is available at www.ebri.org and www.ici.org.